“The Standards permit referral fees that are properly disclosed to clients and do not prohibit gifts to clients in return for their business.” This was included in the answer of the Schweser Practice Exam question concerning a charterholder paying prospective clients as an inducement to gain their personal business, since the local law allows it. Where can i find that in the standards, that it is ok according to the standards such a practice?
Wouldn’t standard I “Know the law” explain this. Must choose the most strict of, local law, law in country doing business, and CFA Standards.
Yes but the answer says that Standards do not prohibit gifts to clients in return for their business. Where can i find that ?
Does not prohibit gifts to clients is different from “paying prospective clients as an inducement” and since the local law allows it but the standard in terms of receiving or making payments to induce favors does not permit, therefore the standard prevails. My understanding>
C3Po Wrote: ------------------------------------------------------- > Does not prohibit gifts to clients is different > from “paying prospective clients as an inducement” > and since the local law allows it but the standard > in terms of receiving or making payments to induce > favors does not permit, therefore the standard > prevails. > > My understanding> That’s how I understood it as well…
Objectivity could be diminished because in some convoluted way you may consider the payment as a "right"and therefore sacrifice standards of fairness, professionalism etc. I know, I am taking this too far…